The Cochabamba Water WarThe Cochabamba Water War

A Flashpoint in the Global Conflict Over Natural A Flashpoint in the Global Conflict Over Natural Resources PrivatizationResources Privatization

CochabambaCochabamba

Bolivia is the poorest country in South AmericaBolivia is the poorest country in South America History of colonial, foreign, and class exploitation History of colonial, foreign, and class exploitation Cochabamba is the third largest city in Bolivia, pop. Cochabamba is the third largest city in Bolivia, pop.

600,000600,000

Water: Social Good vs. Economic Water: Social Good vs. Economic GoodGood

Water is a “human right”, necessary for Water is a “human right”, necessary for life, as acknowledged by the UNlife, as acknowledged by the UN

Water is also an economic good that must Water is also an economic good that must be delivered to people for consumptionbe delivered to people for consumption

Theory that commoditizing water can lead Theory that commoditizing water can lead to conservation by pricing, efficient service to conservation by pricing, efficient service provision, and low cost through provision, and low cost through competitioncompetition

Water systems have traditionally been run Water systems have traditionally been run by the state as public enterprisesby the state as public enterprises

Bolivia and Structural AdjustmentBolivia and Structural Adjustment Structural AdjustmentStructural Adjustment – the – the

deregulation/liberalization of the economy by deregulation/liberalization of the economy by privatizing state run businessesprivatizing state run businesses

Since 1985 the World Bank and IMF have Since 1985 the World Bank and IMF have influenced Bolivia to adopt a “neo-liberal” influenced Bolivia to adopt a “neo-liberal” economic structure to stimulate growth and economic structure to stimulate growth and attract foreign investmentattract foreign investment

Bolivia was required to privatize pubic Bolivia was required to privatize pubic enterprises to secure loans from the Bank and enterprises to secure loans from the Bank and IMFIMF

Bolivia has sold its national railroad, airline, Bolivia has sold its national railroad, airline, telephone companies to foreign owners, and in telephone companies to foreign owners, and in the case of Cochabama, the water worksthe case of Cochabama, the water works

The Case for Privatization in The Case for Privatization in CochabambaCochabamba

Only 57% water coverage in the city under the Only 57% water coverage in the city under the public utility SEMAPApublic utility SEMAPA

SEMAPA notorious for corruption and poor SEMAPA notorious for corruption and poor water servicewater service

Advocates of privatization argued that corporate Advocates of privatization argued that corporate control would allow the water works to run more control would allow the water works to run more efficiently and provide better service to more efficiently and provide better service to more peoplepeople

The World Bank influenced the Bolivian The World Bank influenced the Bolivian government to privatize Cochabamba’s water by government to privatize Cochabamba’s water by offering a $14 million loan and $600 million in offering a $14 million loan and $600 million in debt reliefdebt relief

TimelineTimeline September 1999: Bolivian government September 1999: Bolivian government

signs $2.5 million single bidder contract signs $2.5 million single bidder contract turning Cochabamba’s water system over turning Cochabamba’s water system over to Aguas Del Tunari- 55% owned by to Aguas Del Tunari- 55% owned by Bechtel. Bechtel.

January 2000: Residents protest rising January 2000: Residents protest rising water rates; shut down city for 4 dayswater rates; shut down city for 4 days

TimelineTimeline February 4-5 2000: Protests February 4-5 2000: Protests

become violent. Police use become violent. Police use tear gas on protesters, tear gas on protesters, injuring 175 and blinding 2.injuring 175 and blinding 2.

March 22: Unofficial March 22: Unofficial referendum reveals 96% of referendum reveals 96% of residents disapprove of residents disapprove of Aguas Del Tunari’s contract- Aguas Del Tunari’s contract- government refuses to government refuses to consider terminationconsider termination

http://www.americas.org/item_306

TimelineTimeline April 6: Protest leader April 6: Protest leader

and anti-globalization and anti-globalization activist Oscar Olivera activist Oscar Olivera arrestedarrested

April 8: 17 year old shot April 8: 17 year old shot in face by Bolivian army in face by Bolivian army captain– later acquitted captain– later acquitted by military tribunal. by military tribunal. Overall, 6 dead and Overall, 6 dead and dozens wounded.dozens wounded.

http://www.americas.org/item_306

TimelineTimeline April 10: Government April 10: Government

signs agreement signs agreement guaranteeing removal of guaranteeing removal of Aguas Del Tunari, giving Aguas Del Tunari, giving control of water supply to control of water supply to grassroots organization La grassroots organization La CoordinadoraCoordinadora

Agreement also Agreement also guarantees release of guarantees release of detained protestors. detained protestors.

http://www.americas.org/item_306

The Case For PrivatizationThe Case For Privatization ““The biggest problem with water is the waste of water through The biggest problem with water is the waste of water through

lack of charging.” – James D. Wolfensohn, World Bank lack of charging.” – James D. Wolfensohn, World Bank PresidentPresident

The EU has suggested that all WTO nations should open up The EU has suggested that all WTO nations should open up their water systems to competition and foreign ownership.their water systems to competition and foreign ownership.

The World Bank believes that because many country’s public The World Bank believes that because many country’s public sectors do not have the money or expertise to deliver water sectors do not have the money or expertise to deliver water systems, the private sector should be utilized to handle this systems, the private sector should be utilized to handle this task.task.

However, the World Bank also believes that it is necessary to However, the World Bank also believes that it is necessary to set up regulatory frameworks to ensure that a monopoly set up regulatory frameworks to ensure that a monopoly private provider delivers water at an affordable price.private provider delivers water at an affordable price.

Bechtel’s ResponseBechtel’s Response There were several other preexisting factors:There were several other preexisting factors:

Proposed water legislation that would require farmers Proposed water legislation that would require farmers to obtain permits for water extraction.to obtain permits for water extraction.

Unemployment and other economic difficultiesUnemployment and other economic difficulties A government crackdown on coca-leaf productionA government crackdown on coca-leaf production Police riots over salariesPolice riots over salaries

The system was in shambles when it was first acquired. The system was in shambles when it was first acquired. Service was unavailable to 40% of the city’s population.Service was unavailable to 40% of the city’s population.

Those without connections bought water from tanker trucks at Those without connections bought water from tanker trucks at exorbitant rates that were several times higher than what they exorbitant rates that were several times higher than what they would pay if they were connected to the system.would pay if they were connected to the system.

Aguas del Tunari was able to increase the availability of water Aguas del Tunari was able to increase the availability of water by 30% during the time it was managing the system. by 30% during the time it was managing the system.

Bechtel’s ResponseBechtel’s Response The government of Bolivia raised the water rates.The government of Bolivia raised the water rates.

Half of the increase was necessary for paying Half of the increase was necessary for paying down the more than $30 million debt that was down the more than $30 million debt that was accumulated under the public utility that had accumulated under the public utility that had previously operated the system. previously operated the system.

The higher rate was still 20% lower than the South American The higher rate was still 20% lower than the South American average – including the Bolivian capital of La Paz. average – including the Bolivian capital of La Paz.

The increase in water bills were due more to the fact that The increase in water bills were due more to the fact that increased water availability increased water usage, not the rate increased water availability increased water usage, not the rate increase itself.increase itself.

The rates were rolled back on the second week of February. The rates were rolled back on the second week of February. Those who had already paid their bill at the higher rate were Those who had already paid their bill at the higher rate were refunded the difference.refunded the difference.

Water’s Future in Water’s Future in CochabambaCochabamba

““Water promises to be to the twenty-Water promises to be to the twenty-first century what oil was to the first century what oil was to the

twentieth…”twentieth…”- Fortune Magazine May 2000- Fortune Magazine May 2000

Current SituationCurrent Situation

Bechtel $25m Suit being Bechtel $25m Suit being decided in confidential World decided in confidential World Bank CourtBank Court

Water supply under nationally Water supply under nationally controlledcontrolled

2003 gas wars underscore 2003 gas wars underscore Bolivians’ fears of foreign Bolivians’ fears of foreign exploitationexploitation

Effects in BoliviaEffects in Bolivia

““The other great success of this movement is that we have The other great success of this movement is that we have lost our fear.”lost our fear.” -Coordinadora, 2/6/2000-Coordinadora, 2/6/2000

Renewed Strength of Renewed Strength of Peasant ProtestsPeasant Protests

2003 Ouster of President 2003 Ouster of President in Gas Riotsin Gas Riots

Strong Support of Strong Support of Indigenous LeadersIndigenous Leaders

International EffectsInternational Effects Bolivia: a triumph over Bolivia: a triumph over

neo-liberal exploitation neo-liberal exploitation Power of Bolivian Power of Bolivian

InfrastructureInfrastructure Fear of similar Fear of similar

exploitations in Iraq and exploitations in Iraq and worldwideworldwide

Privatization of Basic Privatization of Basic Human NeedsHuman Needs

Fiercely disputed Free Fiercely disputed Free Trade Area of the Trade Area of the Americas (FTAA)Americas (FTAA)

SummarySummary

ReferencesReferences http://http://www.democraryctr.orgwww.democraryctr.org http://www.bechtel.com/pdf/cochabambafacts.pdfhttp://www.bechtel.com/pdf/cochabambafacts.pdf http://www.bechtel.com/newsarticles/65.asphttp://www.bechtel.com/newsarticles/65.asp http://www.findarticles.com/p/articles/mi_m1525/is_5_86/ai_77279546http://www.findarticles.com/p/articles/mi_m1525/is_5_86/ai_77279546 http://www.americas.orghttp://www.americas.org http://www.citizen.org/documents/privitizationfiascos.pdfhttp://www.citizen.org/documents/privitizationfiascos.pdf http://www.environmentprobe.org/enviroprobe/pubs/eu542.html#south%20americahttp://www.environmentprobe.org/enviroprobe/pubs/eu542.html#south%20america http://www.museumofidaho.org/sponsor.phphttp://www.museumofidaho.org/sponsor.php Stoehhr, Jacob. “Searching for Truth and Water: Deconstructing Cochabamba’s Stoehhr, Jacob. “Searching for Truth and Water: Deconstructing Cochabamba’s

“Water War.” http://sheper.wlu.edu/2004_PDF_papers/04%20Water%20Wars.pdf“Water War.” http://sheper.wlu.edu/2004_PDF_papers/04%20Water%20Wars.pdf